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Digital euro faces scepticism in Germany over privacy concerns
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Digital euro faces scepticism in Germany over privacy concerns

Key Points

  • Privacy concerns are the biggest obstacle to the introduction of the digital euro in Germany.
  • The ECB plans to introduce the digital euro with enhanced security features and offline capabilities.

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In Germany, skepticism about the digital euro is growing as the European Central Bank (ECB) prepares to make a decision on its introduction, expected in late 2025. A new report from Bloomberg shows that Germans, especially older generations, are still concerned about the security and privacy of the digital euro.

In addition to concerns about data tracking and potential misuse, Germany’s long-standing preference for cash also contributes to deep-seated resistance to digital financial solutions.

The ECB aims to address these concerns by taking advanced security measures, such as data encryption and offering digital currencies on cards for offline use.

According to ECB President Christine Lagarde, the ECB wants the digital euro to coexist with physical money, not replace it. The aim is to involve everyone, even those less familiar with new technology.

There is a generational divide in comfort levels with digital transactions, the report noted. Younger Germans are more open to the idea of ​​a digital euro. However, Joachim Nagel, president of the Deutsche Bundesbank, believes Germans can be convinced of the availability of cash.

Nagel also noted that older people are increasingly aware of the latest technologies and see the need to adapt to new developments.

Besides Germany, many countries such as Austria and Slovakia also prefer cash over digital payments. Meanwhile, other countries such as the Netherlands have embraced them.

Evelien Witlox, director of the digital euro project, said the ECB is actively considering issuing a digital euro, but that “it is not inevitable at this point”. The main motivation for the digital euro is to reduce Europe’s dependence on non-European payment services.

If the digital euro is adopted, it will become legal tender. That means that companies that accept digital payments will also have to accept the euro, Witlox said.

US lawmakers are resisting

According to data from the Atlantic Council, some 134 countries are exploring a central bank digital currency (CBDC). A number of countries, including China, Russia and Brazil, have moved to the pilot phase.

The US is currently in the research and exploration phase of developing a digital dollar. However, Federal Reserve (Fed) Chairman Jerome Powell stated that the central bank has no plans to create one.

“There’s really nothing new going on with a CBDC,” Powell said at a meeting of the Federal Open Markets Committee last month. “There’s not much going on at all.”

Like Germans, Americans are unlikely to be in favor of the central bank-backed virtual currency. Opposition is growing among many political figures and groups amid concerns about government oversight of citizens’ financial activities.

In September of last year, Congressman Tom Emmer introduced the CBDC Anti-Surveillance State Act in an attempt to prevent the Fed from issuing a retail CBDC. The bill passed the House of Representatives in May and is now awaiting a vote in the Senate.

A companion bill was introduced in February of this year by a group of five senators, including Ted Cruz, Bill Hagerty, Rick Scott, Ted Budd, and Mike Braun. The bill also seeks to prohibit the Fed from creating a CBDC directly for individuals, indirectly through intermediaries, or using it to implement monetary policy.

US presidential candidate Donald Trump has publicly opposed the idea of ​​a CBDC, saying at the Bitcoin 2024 conference in Nashville that he would never allow one to be created under his administration.

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